Villarreal have announced they have reached agreement in principle with Arsenal for the sale of centre-back Gabriel Paulista, with Gunners forward Joel Campbell heading to the Spanish club on loan for the rest of the season.

The Yellow Submarine confirmed on Twitter that a deal had been agreed on Saturday evening, shortly before their Primera Division match against Levante kicked off at El Madrigal.

"Transfer agreed in principle with Arsenal for Gabriel, who will bid farewell before the game. Much luck!" the club posted.

"Welcome joel-campbell12! Agreement reached with Arsenal until the end of the season."

Arsenal boss Arsene Wenger had been cautiously optimistic at a press conference on Thursday that a suitable agreement could be brokered. Villarreal wanted to see the 20million euros (£15.25million) release clause activated, while the Gunners ere said to be offering in the region of £10million, following add-ons to an initial down payment.

The move will need Home Office approval because the 24-year-old defender does not meet the current required international criteria for a work permit as he is yet to represent Brazil.

As such, Arsenal will need to convince a Football Association hearing that the player is an "exceptional talent".

A new set of regulations has been proposed for next season in a bid to reduce the number of non-European Union passport holders within the English domestic game.

The changes, backed by Football Association chairman Greg Dyke, would see the current requirement of a player having taken part in 75 per cent of internationals over the past two years if their country is ranked within the top 70 tightened, but also allow an exception for any transfers over £10million.

Joel Campbell will join Villarreal on loan

Wenger has long championed the complete freedom of movement for talented players, no matter what their passport says, and believes there is an argument to make football a special case to scrap all the government red tape.

"Ideally it would open completely, and anyone can come in," the Frenchman said on Thursday, at his press conference ahead of Sunday's FA Cup tie at Brighton.

"We had identified (Angel) di Maria when he was 17. We saw him in an international competition and we wanted him to come here.

"But he goes to Portugal, and from Portugal he goes to Spain. Why? Because he could not get a work permit (for England), so that means you can only get him to England once he is worth a huge amount of money.

"What does it mean if at the end of the day he comes anyway into the country (later on), just with a huge amount of money (in a transfer fee) - and who do you pay this huge amount of money to? A club like Real Madrid, they don't need the money.

"We have to be conscious of that."

Wenger admitted last week that it would be a gamble not to bring in a new defender this month.

The north London side have been regularly left short of defensive cover this season with the likes of Laurent Koscielny, Kieran Gibbs, Nacho Monreal and Mathieu Debuchy all suffering injuries.

Debuchy is expected to be out for another three months after undergoing surgery on his right shoulder, leaving Wenger with only six fit senior defenders at the club.

"We can cope because we have (Calum) Chambers, (Per) Mertesacker, Koscielny," Wenger said earlier this month.

"But we have now lost Debuchy who can play centre-back, Monreal who can play centre-back and Gibbs has been out too.

"So if we have another injury or two we will struggle. It is risky (not to sign anyone) - too risky."